According to Gartner, “Customer effort is the strongest driver of customer loyalty — or disloyalty. Boosting customer loyalty is good, but the larger opportunity is to keep customers from becoming disloyal. Customers are four times more likely to leave a service interaction more disloyal than when they entered. And disloyal customers are likely to impact the company negatively — they negatively speak of the organization to others and cease future purchases.”
The Customer Effort Score tells you how your customers experience the service you deliver. The main determination of the CES score is how easy it is for your customers to work with you when they have an issue, question, or complaint. Customers don’t want to put a lot of work into having a question answered or an issue resolved. Respondents are asked the following question:
‘How much effort did you put in to get helped / to get an answer to your question / to have your problem solved?’
Customers answer by assigning a score between 1 and 5 (or between 1 and 7). The CES Score is expressed in a whole number that falls in the range from -100 to +100 and shows how much effort the customer feels they had to exert for their issue to be resolved. A high CES score shows that customers feel they did not have to go through a lot of effort to be served. So, for example, a pool of 500 customers who have recently had an interaction with a company’s Support Department are surveyed with that 1 question. The answers provided are identified below:
So here, 230 customers reported that they expended “Little Effort” and 120 customers reported “A Lot of Effort”, 46% and 24% of the total 500 surveyed. Subtracting the low effort from the high effort, you end up with a CES Score of +22.
As you can see, if all 500 customers reported a 4 or 5 score, the result would be +100 and if all 500 recorded a score of 1 or 2, the result would be -100.
What Are the Limitations?
This is obviously a very important indicator of customer sentiment. Understanding, on a transactional basis, how easy or hard it is to work with your organization is critical to determining where to expend your organization’s effort on continuous improvement. It is, of course, a somewhat limited measurement in that most companies use this metric to evaluate how a specific transaction, issue, or problem was resolved. Therefore, in many cases, companies would only survey customers who have experienced a problem or issue, and not the entirety of their customer base. The exception here would be if the survey was carried out on the ease of purchasing products or services in the initial contact between customer and company.
If used to gauge the ease of resolving support issues, shipping concerns, or other product support problems, an organization would only be sampling a fraction of their customer base. That fraction that experienced an issue. While extremely important, this is a limited view to how the company is performing overall and does not provide enough information on its own.
What Causes High Customer Effort and How Do You Reduce It?
Here are some examples of what customers reported as High Customer Effort:
- Being put on hold for extended periods of time
- Calls being transferred multiple times
- Customer Service Representatives without authority to correct an issue
- Having to call back multiple times to track an issue
- Having to explain what the issue is every time they are transferred/call back
- How longer-term processes are handled, projects that require multiple contacts over time
Looking at these samples, we can easily commiserate with customers who have experienced them. So, how do service organizations eliminate these issues and reduce high customer effort? Designing support for ease of use is a good place to start. Begin by following the process of your customer service and support functions. Look at how many touchpoints there are, how many times there are hand-off’s, and how many times customers need to call back for further assistance or instruction. Simplify the process, give authority to the front-line staff to resolve issues, and educate them to anticipate the next possible issue and address it on the first call.
How Does High Customer Effort Impact Your Business?
It is important to understand how high customer effort impacts your existing business, customer loyalty, customer retention, and retained revenue. According to CEO Mark Bishof, of Clarabridge, a company that has focused on customer effort surveys, “The amount of effort your customers experience to do business with your company is an incredibly hard metric to analyze, yet it has a profound impact on the bottom line. Simply put, the more effort required from your customer, the more likely they are to abandon you for a competitor.” Returning to the Gartner study, they illustrate some remarkable results:
- Average NPS scores are 65 points higher in “low effort” companies.
- 94% of customers repurchase at “low effort” companies, only 9% at “high effort” companies.
- Organizations that have streamlined their processes for “low effort” results have reduced their costs by as much as 37%
- Employees that can provide exceptional services – i.e. “low effort” – are happier and on average staff retention increases by 17%
- The Customer Effort Score is 40% more accurate at predicting customer loyalty than traditional CSAT scores.
In another view of the importance of the CES, the Harvard Business Review states that “We evaluated the predictive power of three metrics—customer satisfaction (CSAT), the Net Promoter Score (NPS), and a new metric we developed, the Customer Effort Score (CES)—on customer loyalty, defined as customers’ intention to keep doing business with the company, increase the amount they spend, or spread positive (and not negative) word of mouth. Not surprisingly, CSAT was a poor predictor. NPS proved better (and has been shown to be a powerful gauge at the company level). CES outperformed both in customer service interactions.”
They found the predictive power of CES to be very strong. Of the customers who reported low effort (a response of a 4 or 5):
- 94% expressed an intention to repurchase
- 88% said they would increase their spending
- 1% said they would speak negatively about the company.
Conversely, 81% of the customers who had a hard time solving their problems reported an intention to spread negative word of mouth.
They believe that the superior performance of CES in the service environment derives from two factors: its ability to capture customer impressions at the transactional level (as opposed to NPS, which captures more-holistic impressions of a company) and its ability to capture negative experiences as well as positive ones.
In the asset and equipment services industry today, the mantra should be “how do I make my customer’s life easy?”, particularly when it comes to their interactions with your organization. The cost of a poor customer effort score is measured in lost customers, lower revenue, higher customer churn, poor word of mouth reputation, and higher staff churn. Companies today work far too hard to acquire customers only to lose them due to poor ongoing support processes. Focusing on the ease of doing business should be a critical priority for service leaders today.
Customer effort can be thought of in a few different ways:
- It is the customer’s own perception of the amount of time and energy that they have to spend in an encounter with you
- It is the non-monetary cost of doing business with you
- It is relative to both multiple or single interactions with your brand
There is no doubt that customer effort can and will have a direct impact on your revenue growth:
- 81% of customers who have found it necessary to use high effort to complete a transaction intend to share their negative experiences with peers
- 82% of people describe a recent interaction with a business as having taken too much effort
- 64% will stop purchasing products from a brand altogether if they find it too difficult to interact with that brand
In a service company that runs at a 20% gross margin, for every dollar or euro lost in reoccurring contract revenue, it takes more than 5x that amount in net new revenue to replace. Keeping your existing customers happy is essential to long-term success. While metrics like Net Promoter Score and Customer Satisfaction are important, their perception of how easy it is to work with you will have a huge impact on if they remain your customer, buy more of your products, and tell other possible customers how great it is/isn’t to work with you. Learn how ServiceMax can help you reduce your customer effort score and keep clients happy.